Shell – one of the major international oil companies – is heading to exit retail activities in 3 major European countries, due to the repercussions of the energy crisis that has extended in the old continent since last year.
The Anglo-Dutch company announced it is considering withdrawing from its home retail business in the United Kingdom, the Netherlands and Germany, according to Reuters.
Shell justified its decision – the subject of the study – by the difficult conditions of the European market, which suffered from a flare-up in wholesale prices during the past year, due to the repercussions of the Russian-Ukrainian war, and the interruption of Russian gas supplies, according to what was monitored by the specialized energy platform.
Natural gas prices in Europe increased by 3 times or more during the year 2022, which led to higher energy bills for consumers in a record that had not occurred in decades.
European governments tried to protect consumers in a different way, most notably by raising spending on energy subsidies by record numbers, while studying a ceiling on wholesale gas prices within the union.
The study takes a few months
Shell has launched a comprehensive review process for its 3 retail companies in the European countries of exit.
The company expects that the review process will take a few months, which will be followed by submitting a detailed report to the Board of Directors, to take the appropriate decision regarding exit or not.
Shell will pump nearly $1.5 billion (cash and loans) into the retail business in Britain in 2022, to help its company there face the huge energy price fluctuations that caused the collapse of competing companies in the UK.
The Anglo-Dutch subsidiary in the United Kingdom, Shell Energy Retail, provides retail services to approximately 1.4 million customers.
The company’s branch in Germany provides its services to approximately 110,000 customers, in addition to 15,000 customers served by the Dutch branch, according to what was monitored by the specialized energy platform.
American and Australian branches are excluded
The review work of the specialized committee does not include wholesale energy suppliers, nor does it extend to retail companies in the United States and Australia, according to the specialized energy platform.
Despite the suffering of Shell companies in the retail energy sector for homes, their annual profits were not affected, and they are close to recording a record jump of more than $ 30 billion during 2022.
The reasons for this profitability boom are due to the ignition of wholesale oil and gas prices, and transferring the cost of the increase to the final consumer while ensuring the profit margin, as companies always do.
Record business results
Shell is expected to announce comprehensive and detailed details of its 2022 business results at a press conference on February 7, 2023.
The company’s previous business results showed that its net profits increased to $9.45 billion during the third quarter of last year alone, according to the specialized energy platform.
The net profit achieved during the 9 months ending in September 2022 amounted to approximately $30.5 billion, amid expectations that it would break the $31 billion record set in 2008.
Months ago, Shell expected to pay taxes worth $360 million for the results of the 2022 business, but the exceptional taxes imposed by Britain and then the European Union on energy companies will incur at least 5 times that amount.
Two billion dollars in exceptional taxes
The company said in a statement issued on January 6, 2023, that unexpected exceptional taxes will incur $2 billion, in addition to its previous forecast of $360 million.
Britain was the first European country outside the Union to impose an exceptional tax on oil and gas companies, then other countries from within the Union, most notably Italy and Austria, followed it, as it imposed it for a period of one year, and will consider renewing it or being content with it at the end of 2023.
The exceptional tax is based on the huge oil and gas price differences achieved by energy companies since last year, due to the repercussions of the Russian war on Ukraine that broke out since February 2022, and is still extending until now.
Britain and European countries announced the allocation of the proceeds of these exceptional taxes to support consumers who suffer from high energy bills at record rates that have not occurred in decades.
Leave a Reply